The Regional Municipality of Halton. Chair and Members of the Administration and Finance Committee

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1 Approved - Administration and Finance - Jun 16, 2010 Adopted - Regional Council - Jun 23, 2010 The Regional Municipality of Halton Report To: From: Chair and Members of the Administration and Finance Committee J.E. MacCaskill, Commissioner, Corporate Services and Regional Treasurer Mitch Zamojc, P. Eng., Commissioner, Public Works Mark G. Meneray, Commissioner, Legislative and Planning Services and Corporate Counsel Date: June 11, 2010 Report No. - Re: CS-48-10/LPS65-10/PW Phase 2 of the 2008/2009 Allocation Program RECOMMENDATION 1. THAT the 2008/2009 Allocation Program - Phase 2 of 6,254 SDE be allocated as follows: 3,837 SDE to the Town of Milton and 2,417 SDE to the Town of Oakville as set out in Report No. CS-48-10/LPS65-10/PW THAT the Commissioner of Legislative & Planning Services and Corporate Counsel be authorized to prepare Financial/Allocation Agreements to implement Phase 2 of the 2008/2009 Allocation Program as set out in Report No. CS-48-10/LPS65-10/PW THAT the Regional Chair and Regional Clerk be authorized to execute the Financial/Allocation Agreements upon passage of a By-law for that purpose. 4. THAT Report No. CS-48-10/LPS65-10/PW be circulated for information to the Town of Milton, Town of Oakville, Town of Halton Hills and the City of Burlington. REPORT The purpose of this report is to recommend approval of Phase 2 of the 2008/2009 allocation program. As shown in the following table the 2008/2009 allocation program included two phases: 2,697 SDE units in Phase 1 and 6,254 SDE units in Phase 2 for a total allocation program of 8,951 SDE units. In CS-49-09/PW-20-09/LPS80-09 (Re: Financial and Implementation Plan for the 2008/2009 Allocation Program), Council approved phase 1 of the allocation in July

2 2008/2009 Allocation Program - 8,951 SDEs ($231.5M) Phase 1 Phase 2 2,697 SDEs 6,254 SDEs $52.0M $179.5M Z5 & Z3 PS (C) South Feed (D/C) Rebecca WM (C) North Feed (C) Wshbrn PS/Appleby WM (C) W/WW N. Prk (D/C) Dunds WM (Appleby) (D) Dunds WM (Appleby) (C) Zone 5 Reservoir (C) Burloak WP (EA) South Fd (Z4PS-Traf/Nigw) (C) Mid-Hlt WWTP (EA/D) Burloak WM (EA/D) Distribution RR25 WWM (EA/D) Distribution Phase 2 Allocation Process In accordance with the Allocation Policy (LPS26-08), the local municipalities are responsible for the allocation to specific developers based on the Regional program. In March 2010, the Town of Milton Council approved the allocation of 3,837 SDEs (Report PD ), and in April 2010, the Town of Oakville Council approved the allocation of 2417 SDEs (Report PD ). Accordingly, a total of 6254 SDEs have been approved by local municipalities for Phase 2 of the 2008/2009 Allocation Program. As part of this process, staff confirmed that the cost and the timing of the infrastructure for Phase 2 continues to be based on the Infrastructure Staging Plan approved in CS-49-09/PW-20-09/LPS Given that the cost structure has not changed, the financial requirements continue to be $36,963 per SDE as shown in the following table. 2008/2009 Allocation Program - Phase II Total Residential Requirements per SDE HUSP Phase 1 (CS-49-09/PW-20-09/LPS80-09) Revised (as of June 2010) W/WW Roads Total W/WW Roads Total DC $ 16,065 $ 13,010 $ 29,074 $ 15,399 $ 12,471 $ 27,870 Upfront Financing Contribution 2,717 5,172 7,889 3,382 5,711 9,093 Total $ 18,782 $ 18,182 $ 36,963 $ 18,782 $ 18,182 $ 36,963 Non-HUSP DC $ 10,501 $ 13,010 $ 23,510 $ 10,066 $ 12,471 $ 22,537 Upfront Financing Contribution 8,281 5,172 13,453 8,716 5,711 14,426 Total $ 18,782 $ 18,182 $ 36,963 $ 18,782 $ 18,182 $ 36,963 2

3 The difference between the Phase 1 and Phase 2 is that the development charge (DC) rate through indexing has decreased by 4.1% since April 1, Accordingly, the upfront financing contribution (prepayment of future development charges) has increased to ensure the same amount of funding is collected. As endorsed by Council in CS-78-09/LPS (re: BILD Proposal re: the Financial and Implementation Plan for the 2008/2009 Allocation Program) and reflected in the Phase 1 allocation agreement, the upfront financing contribution will be incorporated into the next DC By-law update to provide for repayment to the phase 1 and phase 2 developers. Allocation Agreement Staff have continued to work with BILD to review the Region s allocation agreements, particularly to address BILD s objective of ensuring that all payments required from the developers are made under the DCA, Based on these discussions, BILD has agreed to modifications of the agreement as follows: The agreement includes BILD s principle that all payments are made under the Development Charges Act, 1997; The Region will expedite the draft approval process so that it better aligns with the collection of the Regional financial requirements; and The agreement provides for a later payment for high density development. High Density Development Of the 6,254 SDE units in the Phase 2 allocation program, approximately 1/3 of the units are high density. High density is defined as development with a minimum density of 100 dwelling units per net hectare as set out in the Development Charge By-law (No ) approved by Council in The development of high density is typically a longer process than that of lower density units, which results in a longer cash flow to finance the project. Accordingly, paying the Region s financial requirements up front as part of the allocation agreement can create significant financial challenges to a high density development project. To address this issue, the allocation agreement provides for the following: On execution of the allocation agreement, the Region will reserve capacity to the high density project for two years; The developer will have two years to obtain a site plan approval by the local municipality or lose the reservation of capacity; Prior to site plan approval, the developer will be required to pay the Region s financial requirements; Upon payment, the Region would allocate capacity to the high density developers; It is important to note that the allocation agreement requires the payment from the high density developers at site plan approval. This is still regarded as an early payment as, under the DC bylaw (No ), DCs from the high density development are required at issuance of building permit. 3

4 Each high density developer will be required to pay interest on the delayed payment, and BILD agrees that the early payments made by the low density developers will be used first to finance the water and wastewater infrastructure required for phase 2. The Region will provide any additional interim financing if required for the high density from the Capital Investment Revolving Fund with no impact on existing tax payers. FINANCIAL/PROGRAM IMPLICATIONS In keeping with the objectives of previous financial plans and the financing principles set out in CS-73-08/PWE31-08, the recommended Phase 2 of the 2008/2009 Allocation Program continues to include provisions to minimize the impact of the cost of development on taxpayers. The key principles include: The development financing plan will not impact forecasted tax and rate increases. The development financing plan will not require the Region to exceed its own debt capacity levels. The repayment assumptions for Regional interim financing will assume a conservative slow growth scenario to ensure that economic conditions do not create unexpected impacts to the Region. All growth-related costs that can be recovered under the DC By-law from growth will be recovered. Halton s strong financial position and financial planning principles will not be compromised. The implementation of this allocation program and tender of the projects will not proceed unless the Region secures required funds from the developers as outlined in the allocation agreement. Phase 2 of the 2008/2009 Allocation Program generates $231.2 million of water and waste and transportation infrastructure financing from residential developers. 4

5 RELATIONSHIP TO THE STRATEGIC PLAN This report supports the goals of the Strategic Plan to preserve and enhance Halton Region s strong fiscal foundation and administrative excellence. Respectfully submitted, J. E. MacCaskill Commissioner, Corporate Services and Regional Treasurer Mitch Zamojc P.Eng. Commissioner, Public Works Mark G. Meneray Commissioner, Legislative & Planning Services and Corporate Counsel Approved by Pat Moyle Chief Administrative Officer If you have any questions on the content of this report, please contact: Mark Scinocca Tel. #